An engineer prepares a report to evaluate a project using PW and IRR. Just before submitting the report, he spills coffee on it, making the first digit of the 2-digit IRR unreadable. The second digit is a 2. The PW is negative and MARR is 15 percent. He doesn’t have time to redo the analysis. Can you help him figure out the IRR
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An engineer prepares a report to evaluate a project using PW and IRR. Just before submitting the report, he spills
coffee on it, making the first digit of the 2-digit IRR unreadable. The second digit is a 2. The PW is negative and
MARR is 15 percent. He doesn’t have time to redo the analysis. Can you help him figure out the IRR?
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- GeoWorld Systems uses a subset of the following questions during the interview process for new engineers. For each of the following cases, determine if “the project” or “do nothing” is preferred. The value of MARR in each case is 14%.The following table contains a list of activities, with precedence requirements and crash costs. All start and finish times and crash costs are on a per-week basis. Draw the network diagram for the project below. What is the critical path and completion time for the project? Determine the least expensive project cost if the duration is to be 10% shorter than normal project duration. Activity Normal Time Crash Time Normal Cost Crash Cost Predecessor A 10 7 2,000 2,600 B 12 8 1,500 2,000 A C 16 12 2,200 3,000 A D 8 7 2,500 3,000 B E 12 9 1,950 2,275 C F 9 8 800 1,000 D G 24 19 3,650 4,000 E, F H 17 14 1,200 1,800 G Describe the difference between a fixed-quantity and a fixed-period inventory system?Herme, the quarry supervisor for Espinosa Stone, wants to select the more economical of two alternatives for quarry dust control. Help him perform a spreadsheet-based AW evaluation for the estimates with MARR = 12% per year.
- Refer to the XYZ Company example in the chapter and the results in Panels A and B of Exhibit 12.7. On the basis of this information, management of the company has decided to delay the implementation of the project for 1 year. Those managers are now interested in knowing how sensitive this decision is with respect to the assumptions they’ve made regarding the basic analysis. Therefore, they have asked you to prepare some supplementary analyses regarding Panel B of Exhibit 12.7. Required: 1. Holding everything else constant, what is the expected NPV of the decision if the probabilities for the three scenarios are as follows: high (20%), medium (47%), and low (33%)? 2. Holding everything else constant, what is the expected NPV of the decision if the probabilities for the three scenarios are as follows: high (24%), medium (43%), and low (33%)? 3. Prepare a 5 × 3 table containing the estimated NPV of the decision to delay for each combination of the following: risk-free rate of interest…Your team has been asked to select the site for a new plant. Just 15 minutes before the presentation to management, you find a possible mistake in the numbers, putting the cost 10% over budget. You don’t have time to recheck all the figures, so you’re tempted to go ahead without mentioning it. Since many projects run over their original estimates, you can probably work the extra cost into the budget later. What should you do?A process control manager is considering two robots to improve materials handling capacity in the production of rigid shaft couplings that mate dissimilar drive components. Robot X has a first cost of $84,000, an annual M&O cost of $31,000, a $40,000 salvage value, and will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, a $47,000 salvage value, and will increase revenues by $119,000 per year. The company’s MARR is 15% per year and it uses a 3-year study period for economic evaluations. Which one should the manager select (a) on the basis of ROR values, and (b) on the basis of the incremental ROR value? (c) Which is the correct selection basis? Perform the analysis by hand or spreadsheet, as instructed.
- In desalting groundwater that contains a significant amount of sulfates, the concentrate that is generated during the desalting process can sometimes be tough on equipment, so the equipment’s useful life is uncertain. For a treatment train that has an initial cost of $90,000 and an estimated operating cost (OC) between $15,000 and $20,000 per month, use a spreadsheet to determine how many months the equipment must last to recover the investment at i = 0.5% per month at each OC value? Assume the income from the sale of calcium sulfate is $22,000 per month. (Note: Solve using increments of $1000 OC per month.)A manufacturing firm just received a shipment of 20 assembly parts, of slightly varied sizes, from a vendor. The manager knows that there are only 15 parts in the shipment that would be suitable. He examines these parts one at a time.a. Find the probability that the first part is suitable. (Round your answer to 2 decimal places.) b. If the first part is suitable, find the probability that the second part is also suitable. (Round your answer to 4 decimal places.) c. If the first part is suitable, find the probability that the second part is not suitable. (Round your answer to 4 decimal places.)During your first month as an employee at Greenfield Industries (a large drill-bit manufacturer), you are asked to evaluate alternatives for producing a newly designed drill bit on a turning machine. Your boss' memorandum to you has practically no information about what the alternatives are and what criteria should be used. The same task was posed to a previous employee who could not finish the analysis, but she has given you the following information: An old turning machine valued at $350,000 exists (in the warehouse) that can be modified for the new drill bit. The in-house technicians have given an estimate of $40,000 to modify this machi, and they assure you that they will have the machine ready before the projected start date (although they have never done any modifications of this type). It is hoped that the old turning machine will be able to meet production requirements at full capacity. An outside company, McDonald Inc., made the machine seven years ago and can easily do the…
- Because of high production-changeover time and costs, a director of manufacturing must convince management that a proposed manufacturing method reduces costs before the new method can be implemented. The current production method operates with a mean cost of $220 per hour. A research study will measure the cost of the new method over a sample production period. Develop the null and alternative hypotheses most appropriate for this study. Comment on the conclusion when H0 cannot be rejected. Comment on the conclusion when H0 can be rejected.During your first month as an employee at Greenfield Industries (a large drill-bit manufacturer), you are asked to evaluate alternatives for producing a newly designed drill bit on a turning machine. Your boss' memorandum to you has practically no information about what the alternatives and what criteria should be used. The same task was posed to a previous employee who could not finish the analysis, but she has given you the following information: An old turning machine valued at $350,000 exists (in the warehouse) that can be modified for the new drill bit. The in-house technicians have given an estimate of $40,000 to modify this machine, and they assure you that they will have the machine ready before the projected start date (although they have never done any modifications of this type). It is hoped that the old turning machine will be able to meet production requirements at full capacity. An outside company, McDonald Inc., made the machine seven years ago and can…As an staff at company, you are considering two projects which project A has an initial investment of $100,000 and yearly revenue of $17, 600 for 10 years, and Project B has an initial investment of $51,000 and yearly revenue of $10, 100 for 10 years. What is the point of indifference? Which project would you accept at a WACC of 16.0%? a) Point of indifference does not exist, accept project B b)Point of indifference at 8.60%, accept both Project A and Project B c) Point of indifference at 8.60%, don't accept Project A and don't accept ProjectB d) Point of indifference at 14.84%, accept Project B. e) Point of indifference at 11.86%, accept Project B f)Point of indifference at 11.86%, accept Project A